Following years of increasingly rancorous disputes, a Delaware judge has reinstated eBay’s 28.4 percent stake in online classified ad outfit Craigslist…but is permitting Craigslist to keep eBay off its board of directors. The mixed ruling is a partial win for both companies…although eBay was quick to declare a total victory.
“We are very pleased that the Court gave eBay what it sought from the lawsuit,” said eBay general counsel Michael R. Jacobson, without mentioning the board seat. “eBay brought this suit to protect its own shareholders and preserve its valuable investment in Craigslist.”
This particular dispute goes back to 2008, when eBay sued Craigslist claiming the smaller online classifieds service had maneuvered to dilute eBay’s stake in the company from 28.4 percent to 24.86 percent—a move which diluted eBay’s stake enough to knock them off Craigslist’s board.
However, the ultimate cause of friction between the companies stems from eBay’s interest in entering the online classifieds market—which it did in 2005 with a service called Kijiji—now rebranded as eBay Classifieds. Craigslist asserted that eBay—then run by current California gubernatorial candidate Meg Whitman—used its position on Craigslist’s board to gain confidential information about how Craigslist ran its classified ads business…and then used that information to launch its own classifieds service.
Craigslist has not officially commented on the court’s ruling. Under the ruling, Craigslist will be able to retain staggered board elections which will effectively keep eBay off the company’s board.
Last week, Craigslist removed “adult services” listings from its Web sites in the face of growing controversy and criticism the firm was encouraging sex trade and human trafficking.
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